GBP/USD: Trading the British Preliminary GDP Apr 2013

British Preliminary Gross Domestic Product (GDP) is a key release and is published each quarter. GDP measures production and growth of the economy, and is considered by analysts as one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the pound.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Thursday at 8:30 GMT.

Indicator Background

British Preliminary GDP is a key economic indicator, and provides an excellent indication of the health and direction of the British economy. Traders should pay close attention to the GDP release, as an unexpected reading could affect the direction of GBP/USD.

GDP has struggled in recent readings, and posted a disappointing decline of 0.3% in Q4 of 2012. The markets are expecting an improvement in Q1, with an estimate of a gain of 0.1%. Will the indicator push into positive territory in the upcoming release?

Sentiments and levels

The markets remain  downbeat  on  the  British economy, and this was underscored by the Fitch Rating Agency downgrading the UK, citing a weaker economic and fiscal outlook in the UK. Fitch’s move comes on the heel of an IMF report which lowered its forecast of economic growth in 2013. Weak data out of the UK could push the pound lower, especially if the GDP disappoints. So, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5484, 1.5416, 1.5258, 1.5189, 1.5061, and 1.5010.

5 Scenarios

1. Within expectations:  -0.2% to 0.4%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 0.5% to 0.8%: An unexpected higher reading can push the pair above one resistance line.
3. Well above  expectations: Above 0.8%: An surge in the reading would likely help the pound, and the pair could break a second line of resistance as a result.
4. Below expectations: -0.6% to -0.3%: In this scenario, GBP/USD could drop below one support level.
5. Well below  expectations: Below -0.6%. A very weak reading could hurt the  pound, and the pair could fall below a second level of support.

For more on the pound, see the GBP/USD forecast.

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